The relationship between firms and gvoernmetns

The globalisation and the financial market have changed the relationship between firms and governments. Around a century ago, governments had dominated firms that they had a lot of control over companies and firms were much less powerful. This was caused by the financial market was not as complete as the current one. Firms were not able to compete their financial positions with any governments; moreover, firms were not able to move around the world and in different countries, their risks were much higher, as the information at the time was very limited. However, currently many companies have become more and more important. The financial system and the improved management strategies have allowed firms to operate around the world with much more powerful financial support from the financial market. However, due to the current global network, governemnts start to gain more control over multinational governments. Moreover, the increasing public debts have also weakened the government power, as many governments have been seeking help from the international financial market and the international financial institutions. Although since centuries ago, governments have already started borrowing from banks and merchants, at the time the governments can use laws and even military power to default their debts, currently such strategy is no longer an option. Moreover, governments also depend on many of these multinational companies to bring business and economic opportunities into their countries and these companies can also improve the employment rate in their countries.
Overall the relationship between firms and governments is not so equal when it comes to multinational companies.

The WTO and its current function

The WTO is not an organisation of trade deals, it provides an opportunity for participating countries to negotiate about trade regulation. Previously Japan and the US attacked that China had some issues violated the WTO requirement. However, I think that the importance of the WTO has been declining. There are already 164 member countries. Having too many members is not a good thing that it makes negotiation much more complicated and less effective. Moreover, member countries are not necessarily willing to form partnership with all the other members, as some of them do not share similar interests and some might be in conflicts with each other.

Whether or not to join the WTO is a move based on self-interests. Once a country joins the WTO, it is very difficult for other countries to withdraw this country from the organsiation. Therefore, some action that might violate the agreement happens is not a surprise. The large number of member countries make it extremely to monitor every single member's trade behavior.

Comparing the WTO with other organisations, it is not surprising to find that the larger an organsiation is, the less effective it will become. Trade deals are made much better between countries who with geographical similarities or with production differences. If countries produce similar products, they are unlikely to trade with each other, as they are competitors. If they are geographically close to each other, costs of trading are lowered by the geographical advantage.

Therefore, I think that in the future, a large world organisation will not be popular any more, regional partnership will become more and more popular.

The wage hour and the living standard

Chinese wages now have grown higher than in Argentina, Brazil and Mexico and also beaten about 70 percent of the weak Eurozone. It has shown that the improvement in Chinese productivity has contributed the improvement of the Chinese living; however, it also has shown that the economies in Latin America have fallen. The Chinese wages in manufacturing have increased by 200% in the last decade. With the incomes increase, the Chinese consumption power has increased significantly over the last few years that the Chinese tourists have been welcome and believed to have great impacts on the other countries' exports.

Not only the Chinese tourists' consumption help other countries, the increase in Chinese incomes will accelerate the Chinese domestic consumption as well. Some experts argue that the Chinese economy has been too dependent on the investment driven by the expansionary government expenditure; once the Chinese average income level increases, the consumption will increase as well. In the developed world, the high-income level is the most important factor that drives the domestic consumption. In some areas of China, the average incomes have been higher than some developed countries' average income levels.

The increase in the average incomes could lower some advantages of cheap labour costs; however, the improvement in productivity counters the effect from increasing labour costs. In addition, the scale of the Chinese market gives incentives to some companies to locate their factories and offices in China in order to get faster access to the Chinese market.

Overall, the increase in the Chinese average income level and productivity should make people more confident about the future Chinese economy.

What economics can tell and what economics cannot tell

Some experts argue as the importance of economics increases over time nowadays, university students should learn more economics, as economics can arguably help us to understand many current affairs and improve people's abilities to avoid some exogenous risks.

Economics does not precisely model the real world economies as there are countless factors and some of the factors are even not yet realized by some experts as well. Studying economics can help to understand some very basic concepts of the markets, and apply the concepts to think of some real world problems by simplifying the models. Economics can be thought to be a subject of social science but using natural science methodology and thinking. Moreover, economics also helps to give some special preferences numerical values and model the social problems as natural science problems. Economics provides logic thinking process and rationale when analyzing social issues. Economics will be useful to making individual decisions, especially those targeting specific goals. However, when dealing with some complicated issues with multiple goals, the use of economics will be less effective and is more likely to cause some results that can be significantly different from the reality. Of course, such issue occurs in all kinds of modeling, when modeling more complicated issues, the models become less accurate and reliable.

Economics has another issue, economic models and theorems are sometimes lagged behind the real world progress. In natural science,  the environment and the experiment field do not change; however, in social science field, factors are always changing. Many economics models are developed from the last period, they may be good at explaining the facts at specific time, but as time progresses, things change and the models become less reliable. This is why everytime when there is a new financial crisis, there is no pre-existing effective policy to correct economies immediately.

The future trade partnership between China and the US

Steve Mnuchin, the US Treasury secretary, claims that a strong US dollar policy will benefit the US economy and the aggressive attack on China manipulating its currency was much softened in his speech this Thursday. The tension between the US and China is likely to be softened.

Tax rates and tax incomes

The UK government is currently talking about amending its tax rates on businesses and housing and the goal is not only to encourage small businesses and improve economic performance, but also to improve the current budget. The former Chancellor Osborne raised the tax rates on luxury housing and this led the tax incomes from housing stamp taxes to reduce. The stamp tax increasing led to the quantities of housing sales reducing. Given the uncertainties caused by the upcoming Brexit, the UK housing market is in decline. Once the market is in boom, the tax rate hike could improve the tax incomes, as the quantity is less influenced by the tax hike.
The goal of tax is to mitigate the economic volatility. The government budget is important but sometimes is not as important as people expect. In the countries with strong economies, the governments do not necessarily need a very government budget. The US government expanded its deficit constraint under the Obama administration. Although it did influence the financial market, it did not have a long term impact on the global economy as well as the financial market. Moreover, under the Trump administration, the US government budget deficit tends to enlarge, but the reaction of the Wall Street stays relatively optimistic about the future US economy and does not pay much attention about the American government deficit.

The nature of research

Some firms are spending billions on researches in order to gain more growth in the future. Such investment can have a very generous profit if the research succeeds, while the risk could be high as well. It can be shown from the stock prices of this kind of firms, especially in the pharmacy industry when the research makes a significant progress the price spikes up, and alternatively when the research fails or does not meet the requirement, the price spikes down. However, sometimes such research can be less risky if the cost is not significantly high and the cost of investing in research varies across different sectors. For example, the resources that are required to invest in aerospace are much greater than the resources that are required to invest in video gaming industries.
Moreover, the resources are not just monetary resources, but also time is very important. Many companies and individuals may be doing the same research project, the one who succeeds first will take all the credit of the research and other participants are unlikely to take any rewards. Therefore, if sometimes the research can succeed, the profits could be much fewer than expected. This could increase the risk of research largely.

Widening world wealth gap

Some large countries including America and some European countries move their attention from overseas to domestic issues. It fears some people that some developing countries will receive much fewer aids from the developed world, and this could lead to a wider world wealth gap. Is this true? Maybe or maybe not. There are downside effects and upsides effects of such political change.
The downside effect is very obvious, the large countries will put their own interests first, they are not going to provide charity aids; therefore, if the developing countries want to gain some resources from the developed countries, they are more likely to use their own resources to exchange. In addition, these developing countries will be less interested in improving the lower classes' living standards as these governments are more likely to be corrupted. Therefore, not only the wealth gap between countries widen but also the wealth gaps between the different social classes in the developing countries will widen as well. Moreover, as the wealth gap is widening, the social unrest will become more volatile and this will further widen the wealth gap. These are all the downside effects; however, there are some upside effects as well. Firstly, the developed countries will intervene in the developing countries less, this gives a chance for these countries to shape their own political and economic systems that may better suit their current conditions. This can give them a chance to develop a most suitable system for themselves. While the foreign intervention may bring political conflicts and other conflicts, as the foreign countries do not have the knowledge to intervene in the areas without damaging some groups' interests. When they are solving the problems domestically, they may not rise up and fight, as they do have a system to cooperate and communicate with each other; however, foreign intervention is very likely to cause regional conflicts.

The transport industry

The transport industry is an industry that differs from many other industries. The sectors in this industry are always started from the demand from other sectors, and the first investment often comes from a large organisation or a few wealthy groups. For example, shipping was originally organised by some large merchants, then when the Western countries started to colonise other parts of the earth, some of these ships were bought by royal families and lent to companies or individuals. In the modern eras, some large airway companies were firstly founded as nationalised companies or state managed companies. These are all because the initial investment of the transport industry is enormous, that only the top wealthy groups and countries can afford such costs. Moreover, transport has an important role playing in wars, this is another reason why governments want to have control over the transport sector and almost all governments have departments of transport. In addition, transport means a lot to our civilisation. It increases productivity and provides more and faster accesses to resources and during the civilisation, transport actually provided the Western countries with more resources and land in other continents. There is a modern transport company that may have the similar meaning. If SpaceX is possible to let our human beings land on Mars, we definitely gain much more resources and land. The investment in the transport sector will always continue, while different sectors will be distributed with different amounts of resources, it usually starts with relatively fewer resources, as investors want to see the actual returns of their investment. Once it has been proved as a successful product, the investment will then increase rapidly, some large investors including governments will step in. After a while, the public funding will leave the sector, and the sector will be privatised.

More jobs or higher productivity?

Some countries have declining productivity rates, these countries include some developed countries including the UK. Currently the UK has a very low unemployment rate and should the UK sacrifice some of its employment rate to exchange for higher productivity. People may find in some developed countries, the manufactures are occupied by machines and very few workers, while in developing countries, the labour force is still the dominated power in manufactures. This is often seen as the evidence showing developed countries have better productivity than developing countries. This may indicate that when the investment in machinery increases, the productivity will improve automatically. In addition, some researchers claim that narrow wealth gap helps to improve productivity. This may make sense as when people are easier to break their class boundaries they have incentives to work harder. However, when the gap is too narrow, the incentives to work harder may decrease and the reason of why countries with narrow wealth gaps have better productivity is because these countries are developed countries. The real differences between developed countries and developing countries are developed countries have better technologies, more funding available, better financial sectors, and many other advantages excluding cheap labour costs. These advantages have one core function is to use a limited number of labours to produce more products. Once the demand is weak, the demand for products is limited, then the need for improving productivity becomes less significant. Moreover, when the demand is weak, then the unemployment stays low then the productivity is definitely going to reduce in order to equate supply to demand.
Overall, once the demand is weak, the supply is forced to be reduced, then productivity has little room to improve.

Weak demand-supply relationship industries

The market price is determined by demand and supply; once the market is imperfectly competitive, one side will dominate the other and gain the pricing power. When the supply side dominates the demand side, it is caused by several factors. Firstly, to achieve the best productivity, a massive size of production is required in certain industries. The energy industry and the food industry are this type of industries. Secondly, some industries require very cutting edge technologies. The military and aerospace industries require the cutting edge technologies and the access to these technologies are also strictly limited and protected by the governments. There are some situations when the demand side dominates the supply side. For example, Apple is a successful company, when it borrows from banks, its loans have the best rating then many banks seek the opportunity to lend to Apple and Apple can negotiate the interests.

However, the demand and supply relationship is still very clear, some cases do not have such clear relationship. Sometimes, some services are compulsory and do not have some direct links between the demand side and the supply. These are often seen in some public sectors, sometimes they are not often seen as markets, such as the tax system, the government could be seen as the demand side and the general public are the suppliers. Sometimes the demand-supply relationship is not clear as the companies are making profits from elsewhere, so the supply side makes the products free. For example, the users of Google and Google have the demand-supply relationship and the searching service provided by Google is free. In addition, such relationship is reversed in some ways. Google is making profits by selling advertise, in order to sell more, Google has to maintain a large size of its users, then Google demands the size of its users, and people supply the size.

How to rate student loans' credits

Moody downgraded UK student loans. The process used to rate student loans must be different from the process used to rate corporate bonds. I think that the credit rating of student loans has a greater dependence on the economy. Once the economy is strong, graduated students are more likely to have jobs and more likely to receive incomes that meet the minimum requirement for collecting back loans from students. In the UK, it is easy for the government or the loan collecting agencies to collect loans from students, as the payback is directly drawn from the system like income taxes and graduated students do not have the choice to default their loans. This gives the loans more security. This is made possible under the government management; if there is no central government intervention in student loans, the risk of defaulting loans increases. Therefore, the student loans in the UK should be less risky than those in other countries which do not central government coordination.
However, the central government can increase the risk of student loans, as the central government can change the policy in order to change the returns of the student loans. For example, the central government can increase the categories belonging to the disadvantaged group that is offered some cut in their student loan payments. The central government could also increase the minimum requirement for collecting loans or change the tuition fee instantly, these two policy changes will affect the expected return from student loans. Therefore, the credit of student loans could be different under different governments. In the UK, once there is a Conservative government, the expected return from student loans should be higher, as the Conservative government is more likely to increase the tuition fees; while a Labour government is more likely to cut the tuition fees and lift the minimum wage requirement in order to collect loans.
Therefore, the credit rating of student loans is not necessary to depend on students' individual characteristics, but it depends more on the exogenous factors, including the economy condition, the labour market situation and etc.

Is manipulating exchange rates to affect the current account effective?

Many countries have been talking about increasing exports and reducing imports; by achieving such goal, a strategy of depreciating currencies is always brought onto the table. I doubt if such strategy is as effective as we imagine.

Firstly, the current floating exchange rate system is the most popular one around the world. Using monetary policies to affect the exchange rate is often effective but there are many other factors that will shift the exchange rates. Once there is too much noise in the Forex market, the attempt to manipulate the exchange rate is very highly to fail and cause some unwanted side effects. Secondly, pushing exports to grow and reducing imports will always add an appreciation pressure on the currency; therefore, even with a continuous policy that drags down the currency value, it is highly unlikely to create a dramatic currency depreciation. Thirdly, a stable and predictable economic environment is better for the society, the economy and the business activities. Having an aggressive monetary policy to intend to manipulate the exchange rates will add uncertainties to the economy. Fourthly, the countries with very cheap currencies do not have very good economic development or excellent current account, as these countries have very weak economies and some degree of social and economic chaos. Once the economy is growing healthily, its currency value will also increase inevitably, showing an increase in the confidence in the economy. This is a very positive effect that we should welcome. Fifthly, although improving in current account is likely to increase the GDP, a strong currency is possible to help to increase investment, which is also going to increase the GDP.
Finally, the currency value is only one factor to influence the current account, quality and productivity are another two important facts that will definitely influence the current account.

Therefore, I do not think that improving the current account by manipulating exchange rates is effective and will help our economy as much as we expect.

The future oil supply and price

The oil supply cut has beaten the market expectation, while the rate of the new oil and gas discoveries is lower than the previous rate. These two factors will push the oil price higher in the short and median terms, and the supply will decrease further. There will be fewer and fewer oil and gas discoveries in the future, the supply will be affected and the oil industries may need to improve their technologies in order to improve productivity or find an alternative product, but given the current alternative energy industries, it is unlikely for these oil and gas companies to enter the markets without acquiring an existing alternative energy company.
Once the number of new oil and gas discoveries is declining over years, the oil suppliers are forced to reduce their supply quantities. In addition, they also need to meet the market demand, as under the current situation, if the oil supply cannot meet the market demand, there is a high possibility that could lead to an economic crisis in a global scale and the oil suppliers will also suffer the consequences of the crisis and face financial and economic oppositions. Moreover, companies and countries also see it, the spending on research and development in alternative energy I think will increase, as people may feel more and more urgent to develop a sufficient energy source to meet the market demand. Though in some countries the alternative energy industries are believed to heavily depend on subsidies from the governments, which make their businesses seem vulnerable and unsustainable, and some countries have started to cut the subsidies, I think that the subsidies may continue until a sufficient energy source that can meet the same power standard of the fossil fuels is developed. Especially when the oil price continues its increasing trend, more subsidies may be introduced and the alternative energy industry will be more competitive and attract more sources and investment.
Therefore, the future oil supply is very likely to have a declining trend and the price will increase as long as no alternative energy source can have the same kind of power as fossil fuels have. However, it will create more room for the alternative industry to develop.

Individual interests and corporate interests

It is fair to say that all countries want as many companies as possible to locate in their countries, as these companies will increase tax incomes, create more jobs, reduce unemployment rates, increase economic growth rates. As we can see that attracting more companies into the country can bring a lot of advantages and benefits for the country, is it fair to make corporate interests equal to individual interests? The answer is obviously negative. As we can see that in some countries, the population opposes against the policies that are in favour of companies, especially those benefiting large companies. Such phenomenon suggests that individual interests are very different from large companies' interests.

It is easy to understand that the benefits of individuals are the costs of companies; however, the consumption of individuals are the revenues of companies. We can see that the interests of individuals and companies are not totally opposite to each other, there is a possibility of the existence of an equilibrium that balances both sides' interests. However, it is easy for companies and individuals to make decisions based on their individual preferences; therefore, the outcomes are often socially undesirable. The outcomes are believed to be in favour of large companies by the general public. However, it is fair to say that it may be a public opinion rather than a fact. The general public are the majorities in this issue, the owners or the beneficiaries of the large companies are the minority group in the population. The politicians have to hear the majority group's opinion, though it is not necessary to be the truth. Moreover, although there is some evidence that wider wealth gap causes a decrease in productivity, we can see that the countries with narrower wealth gap are developed countries but have relatively lower economic growth and the exact causal relationship between the corporate tax level and the economic growth and other factors is unclear and complicated.
Therefore, increasing corporate tax I think is not necessary to improve the outcomes in terms of social benefits. 

What is the Trumpflation and does it make sense?

Trumpflation is that the market believe that under the Trump administration the US economy will experience a faster growth period as Trump is very likely to deregulate the banking sector and cut the current tax levels and move jobs back to the US. Based on such belief, the US economy will be generated by an expansionary fiscal policy, an increase in investment and an increase in people's consumption hopefully due to the possible tax cut. However, is Trump's such strategy effective in making the US economy stronger?

My opinion is that the large multinational companies and financial institutions will benefit from his policies as they can reduce their costs as the taxes will be cut and there will be less regulation. Therefore, I expect that in the short term the US economic growth may be boosted by the companies and financial institutions growth and expansion. However, in the long term, the US economy has some degree of probability to enter its declining trend, if we compare the current US with Britain from the late 19th century. Britain in the 19th century and the early 20th century, the British empire entered its declining period that it lost its economic and military strength. Britain lost a war in Africa when fighting the local tribes and Britain also lost to Iraq and Afghanistan in the late 19th century and the early 20th century. Many people argue that Britain at the time lost its advantage in its productivity and had a social unrest due to a very wide wealth gap. In order to solve the problems, the British governments under both Liberal PMs and Tory PMs established the base of the future welfare state, including the introduction of minimum wage, pension schemes and etc. Afterwards, Britain remains as a global important country and definitely lost its leader position to America.

The current America has some similarities. The lower middle class and the working class and some middle class people are unhappy about the current situation due to an increase in the wealth gap in the society and the gap can be widened under the Trump administration. Adding to this, America has a close to full employment economy and many people have already been complaining about the system, it could be far worse if a crisis takes place. Moreover, America has got itself trapped inside some conflicts across the world, that could cost many American resources and bring up domestic criticism if America loses in any of the conflicts or makes large sacrifice. However, there are some differences. America has a large land that is able to provide very rich resources, but Britain had some dependence with its colonies. In addition, Britain went through two world wars that significantly damaged the British economy and society; however, once the great powers have nuclear weapons, a large scale war will be more deadly but less likely to take place as no single great power can accept the damage from such large scale war.

Overall, I see that Trumpflation mainly targets at the American large scale companies and financial institutions, to the American society, the wealth gap will be wider and in the long term the economy may be dragged down by the social unrest caused by the wealth gap.

The price of gold

I expect that the gold price will continue although it has already experienced a significant rise in its price based on several reasons.

Firstly, many large countries want to depreciate their currency value, including Japan and the US especially. In addition, though China has the willingness to appreciate its currency in order to bring more confidence and stability into its economy, the decline in China's foreign reserves will add some pressure on RMB's price and drag down the price. Under a global environment of increasing depreciating currency popularity, the gold price will rise instead. Secondly, the instability in Europe in terms of economics and politics will increase the gold price. The increase in populism in  European politics will affect the European unity as well as the foundation of the Eurozone. Brexit may set an example to encourage more European Union member countries to leave the European Union. The conflict between the IMF and Greece could increase the uncertainty in the regional economy. The political and economic uncertainties increase the possibility of a further increase in the gold price. Thirdly, a report from Moody's Investors Service shows that 1.063 trillion junk bonds will mature in the next five years. In addition, the average yield of high yield bonds has reached the lowest point since September 2014, showing that the popularity in high yield bonds increases; and it could become even more popular if Trump deregulates the banking sector. This definitely increases the systemic risk in the global economy and it may increase a bubble in the high yield bond market. Once the bubble bursts, there could be another financial crisis. It could be another drive to increase the gold price. Fourthly, the increase in populism in a global scale and some regional conflicts can increase the gold price.

Based on the above reasons, I expect the gold price will continue its increase trend.

How useful are data

Data are not only used in natural science and have been widely in all sectors in our life. Economics and many other social science researches love using data to make estimates, draw relationships between different variables, evaluate policy's impacts. In addition, data in many case people believe represent the truth. However, is this statement? This statement is definitely wrong that data can represent an image that is close to the truth but can never represent the truth. Even sometimes we are able to collect data from the whole population, due to the unavoidable human errors and research imperfection, we cannot get the true data from the population.

Moreover, even with the correct or perfect data, some conclusions drawn from analysing the data can be inaccurate and sometimes can be very different from the nature. Firstly, the researchers may not find the most fitted models to start with. Many data analyses are started with linear regressions, especially in some social science researches. However, sometimes the relationships between the variables can be much complicated than that and often it is just impossible to build a perfect model. Secondly, there have been so many assumptions in many existing regression methods. More assumptions there are, less credible the model becomes. In addition, the strengthen of the assumptions also affect the credibility of the model. Common sense tells us that models with weaker assumptions are better than models with stronger assumptions. Currently many models and methods have been built to weaken the assumptions in the existing models and methods. Thirdly, it is naturally difficult to include all relevant data and variables in the models. Moreover, more variables does not increase the requirement for the sample size only, but also may move the covariances between independent variables away from zero, though such problem will also hide in the error term otherwise.

Because of the imperfection of data analysis methods, data cannot be the only evidence we rely on. Of course, we can still use the data analysing results but we have to understand the possible errors existing in the model and make adjusted conclusions from such results.

Snap may set an example for other private companies which are looking for IPOs

It is not news that the company, Snap, said its IPO would be the first to offer shares with no voting power and the founders will continue to rule the company even after they step down. Many big investors oppose this idea as they are more likely to hold significant numbers of shares that allow them to have some control over the companies under the normal situation. I think that if Snap could achieve its IPO target of $3bn, more private companies will use the same IPO strategy. This can be a positive thing for the market, especially given the number of new IPOs in recent years is declining and more private companies decide to stay private as the managers and founders want to have more control over their companies.

The voteless share is definitely priced lower than the shares under the normal circumstance, as the voting right has a value to the share price. Sometimes managers have great influence over their companies as they have unmatched skills and talent. There are many such figures including Steve Jobs, Elon Musk, Warren Buffett and many others. In these talent managers' companies, sometimes the large shareholders' votes may cause noise and confusion in the companies and drag down the companies' performance, that some people think Steve Jobs was voted to leave Apple is a classic example. If investors deeply believe in the founders or the managers of a company, holding voteless shares may not be a bad thing that it could reduce the uncertainty caused by the possible conflict between the ownership and the management. In addition, it does not make any difference to small investors as they are unlikely to hold significant numbers of shares to have a say in the board. It also avoids a hostile takeover. To large investors, the risks of investing in such companies increase as they cannot make a change (lower its leverage ratio) inside the company to manage its risk internally.

Such companies that only offer voteless shares naturally and objectively have higher level of risks that the future of a company is fully controlled by a very limited group of people. However, to the stock market, more private companies may use such strategy for refinance themselves, as it is very attractive to many private company founders and owners.

The effect of outliers on the overall model

When we are conducting a test or doing a survey, there are some results that could be very away and different from the average results. Therefore, many researchers want to calculate the effects of all extreme data or so-called outliers on the final models in order to improve their models' accuracy. There have already been some methods to test if the outliers are influential points. The two main measures of influence are leverage and Cook Statistic.

The formula for measuring the leverage suggests that if the sample size is large enough, the leverage of a particular datapoint will be very very small, which means the influence of the datapoint is very limited on the overall result. In addition, Cook's distance depends on the size of the residual and the size of the leverage; therefore, once the sample size is large enough, Cook's distance will also become insignificant to the overall result. Therefore, in a large sample, the need to test the influence of the outliers seem unnecessary in my opinion. In addition, if the sample is so small that makes the influence of the outliers become significant, the small sample size definitely causes many other problems in the model and make the model result seem inaccurate and less credible. In this case, thinking about the influence of the outliers seems less important. Based on these opinions, I think that measuring the influence of outliers in a model is not something very important or necessary that has to be done.

When something does not have a monetary value or is not tradable, its utility varies between different individuals and between different time periods

It is common sense that when there are more than enough choices available, it is harder to make the best decision. Based on the economics concept, we have to give a standard utility unit to all available choices' utilities in order to compare them "accurately", in other words numerically. My opinion is when something does not have a fixed monetary value or is not tradable, its utility always varies between different individuals and between different time periods. Once a good or a service has a monetary value and is tradable, it means all individuals can use the good or the service to exchange any other good or service with the same monetary value; therefore, the utilities of the tradable goods and services should be the same, if we ignore the transaction costs which always exist. However, if it does not have a fixed monetary value, it means that the goods or services it can be exchanged for are unfixed, so the utility of the good or the service is unfixed. Such goods can be art masterpieces, as people price them differently and their values can be different between generations. In addition, if the good or the service is untradable, then people cannot use it to exchange for other goods which may have the same monetary value, in this case the two goods' utilities are largely depending on individuals' preferences. Therefore, when something is not tradable in a free market (it is better to say in a perfectly competitive market, as individual actions will not have an impact on the market price), its utility is not fixed and is difficult to be compared with other goods and services.

The marginal utilities are generally considered to diminishing; therefore, the different levels of consumption will make the marginal utilities at that time point different from those at another time time point, when the individual cannot use a proportion of the consumption to exchange for something else. The different levels of consumption can be caused by different individuals' characteristics or different time periods. Individuals' personal preferences will give the same good or service with different utilities, unless they are tradable. Therefore, it is possible to rank the population's marginal utilities of the first consumption of an accountable number of goods and services. When the number of goods and services are included, the estimated ranking will be likely to be further away from the true ranking. In addition, when the consumption levels are high and different among the population, the estimated ranking will also be more likely to be further away from the true ranking, as the diminishing utility effects vary between different individuals.

Therefore, when we build a utility or preference model or function, it is better to have more objects with existing monetary values and have fewer objects without monetary values, and when each individual has a very different consumption level, it will cause the ranking that represents more of the majority consumption level group's preference rather than the natural utility of the good or service.

The deregulation in the banking sector

Today, the US stock market soars as Trump is expected to deregulate the banking sector that the Goldman Sachs stock (GS) rises by around 4.5% and the JPMorgan stock rises by over 3%. Trump has ordered to review a 2010 financial reform law that force investment advisers to act in the best interests of their clients, the purpose of the possible deregulation is to increase the possibilities of companies borrowing from banks and other financial institutions, in Trump's words "I have so many people, friends of mine, that have nice businesses and they can't borrow money. The banks just won't let them borrow becuase of the rules and regualtions in Dodd-Frank".

Such possible deregulation action will increase the banks' and other financial institutions'  equities and they could increase their revenues and profits when they are able to lend more money. The banks may be even able to increase their leverage ratios. This can improve the profitability of the banking sector; however, this could also increase the risk in the banking sector. The leverage could increase the potential profits but also increase the potential losses, it is a great advantage when the economy is in a good shape; however, it will be a disaster when there is a financial crisis and this is a very important reason that why the Obama administration introduced the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Currently, some large companies have already relatively high leverage ratios, given the continuing low interest rate environment. The deregulation of the banking sector will increase the high yield bond markets, as the companies with lower credit ratings are able to borrow more than the previous level.

Overall, I think that under the current situation, the possible deregulation is made based on the optimal expectation of the US economy in the future.

The Brexit White Paper

The British government has published a 77 page white paper about its Brexit purpose and plan (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/588948/The_United_Kingdoms_exit_from_and_partnership_with_the_EU_Web.pdf). The white paper covers twelve topics about Brexit that are stated in the contents (page 7).

The topics are the goals that the UK government wants to achieve; however, some of the issues are not very easy to be achieved and the white paper also has some compromise about certain issues. For example, the EU immigrant limit will take several years to be finally introduced. Some of the goals are different from the promises and the ideas that were previously made by the "leave" campaign: for example, the wish to maintain a free trade deal with the European Union after the Brexit. In addition, some of the ideas in the white paper maybe seem too optimistic. Firstly, the idea of ensuring the free trade with the European markets is optimistic. The European Union led by Germany seems to be very tough on the issue of Brexit and the possible future deal with Britain, they are more likely to structure a very tough deal with Britain including letting Britain lose its free access to the European markets. Secondly, the national union is another very serious issue. In the referendum, Scotland and the Northern Ireland both voted for staying in the European Union. If Britain has to face a tough Brexit, it could cause a series of consequences, including the unpopularity in Scotland and the Northern Ireland, which could cause another Scotland independent referendum or even a Northern Ireland independent referendum.

Overall, although the Brexit white paper provides a simple guidance about the UK government's plan on the issues regarding to Brexit, some of the issues seem too optimistic to be realistic.

The possible trade deal between the US and the UK

The UK Parliament today has passed the Article 50 case, that it allows May to trigger Article 50 by the end of March and her schedule is not going to be delayed. Apparently the MPs do not want to seen as "the enemies of the people". May has been very confident about her plan to make a trade deal with the US, based on the "special relationship"with the US and she has also promised that NHS will not be part of the trade deal, especially given the cost of the UK government expenditure on the NHS is extremely high and the US health care is much more expensive than that in the UK.

The UK and the US have some similarities in their economies that build the base for the two countries' cooperation and trade partnership. The two countries have the common language and a similar law system that this could make the business activities and cooperation easier and smoother.  In addition, the two countries have very complete financial markets and have been the two financial centres in the world. This could build a bridge between the countries' financial companies, this will be welcomed by many financial institutions. In addition, as Britain is expected to leave the EU in the future, it is urgent for Britain to find a new major trade partner. Britain has been trying to build a good trade relationship with China, and has achieved some success. However, the EU has been the largest trade partner of the UK for decade and it is inevitable that the trading volume will fall significantly after the UK officially leaves the EU; therefore, the UK has to find another trade partner which can take over the missing position of the EU and the US becomes the best option. However, to the US, the UK is not a bad option as its trade partner. Firstly, the goods exports of the UK are not very competitive compared with the US or Germany. Having the UK as the American trade partner is not going to lower the American exports and have the UK as a transfer station to have access to the European market.

Overall, the trade deal between the US and the UK is very likely to be successfully achieved and is going to be mutually beneficial to the both countries.